Passenger Vehicle Industry to See Modest 1-4% Growth in FY26, Says ICRA

Mumbai, 29 August 2025: As per ratings agency ICRA, India’s domestic passenger vehicle (PV) industry is expected to post a modest 1–4% growth in wholesale volumes in FY26. As per ICRA’s report released today, wholesale volumes decreased between April and July by 1.1%, showcasing an underperformance at the start of this year. However, demand is expected to increase in the coming quarters owing to steady new model releases by auto companies and the potential lowering of the GST burden within the new GST reforms.

Proposed GST Slab Reduction to 5% and 18% Could Benefit Auto Makers

The Indian government plans to implement a new GST regime by Diwali 2025, reducing slabs from 5, 12, 18, and 28% to just 5% and 18%. This streamlined structure is expected to lower costs for auto makers, potentially supporting long-term industry growth.

Festive Season Inventory Push Drives 8.9% Sequential Rise in July PV Sales

In July 2025, sales for wholesale PV increased by 8.9% sequentially as original equipment manufacturers (OEMs) grew their inventory ahead of the festive season. Despite this, volumes were muted year-on-year at 3.4 lakh units. Furthermore, retail sales also improved, rising 10.4% sequentially. However, they decreased 0.8% year-on-year due to uneven demand recovery.

SUVs Dominate Market, Making Up 65-66% of Total PV Sales

Sport utility vehicles (SUVs) continued to lead the passenger vehicle segment, representing 65–66% of total sales. According to the Federation of Automobile Dealers Association (FADA), inventory levels climbed to 55 days by the end of July, raising caution for OEMs and dealers ahead of India’s critical festive season.

Exports Rise 9% YoY in July, Led by Maruti Suzuki and Hyundai

On the export front, India’s passenger vehicle shipments rose 9% year-on-year in July 2025. Maruti Suzuki led the growth, followed closely by Hyundai Motor India, reflecting strong international demand. This export momentum highlights the resilience of Indian automakers and contributes positively to overall industry performance despite domestic market fluctuations.

Investors Watch August Sales Data on September 1 for Auto Sector Trends

Investors and other market participants will now keenly wait for the August sales data, which is to be released on September 1. Auto shares, along with the Nifty auto index may get affected based on the upcoming figures.

Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations